Prysmian S.p.a. · MIL:PRY
Prysmian — FY2014 Earnings Presentation
68 slides from Prysmian's earnings presentation, March 2015
Slide 1: Prysmian Group Company Presentation
Prysmian Group Company Presentation March 2015
Slide 2: Agenda
Agenda Group overview Results by business Financial Results Appendix Company Presentation – March 2015 2
Slide 3: FY 2014 Highlights
FY 2014 Highlights Adj. EBITDA at € 509m (€ 603m excl. Western Link): guidance achieved Still weak market demand in cyclical businesses Strong growth in the Submarine business, solid recovery in Telecom’s volumes and profitability Weaker than expected development in OEMs and Oil & Gas Net
Slide 4: Prysmian group at a glance
Prysmian group at a glance FY 2014 Financial Results Sales breakdown by business Sales breakdown by geography Telecom Energy APAC 14% Projects 13% Other 20% Latin America 2% 8% € 6,840m € 6,840m EMEA Industrial & 64% North America Netw.Comp. Energy 15% 25% Products 66% E&I 39% Adj. EBITDA by busines
Slide 5: FY 2014 Key Financials
FY 2014 Key Financials Euro Millions, % on Sales Sales Adjusted EBITDA (1) Adjusted EBIT (2) +1.8%* -3.3%* 650 +2.7%* 613 603 494 7,574 465 459 6,995 6,901 509 6,840 365 8.6% 8.8% 8.7% 7.4% 6.5% 6.7% 6.7% 5.3% 2012 2013 2014 2014 2012 2013 2014 2014 2012 2013 2014 2014 ex.WL ex.WL ex.WL * Org. Growt
Slide 6: Adj.EBITDA and Organic Growth by business
Adj.EBITDA and Organic Growth by business Profitability decline mainly due to WL issue. Sound recovery in Telecom, E&I at the bottom Adj. EBITDA (€ million) and Organic Growth (% change vs. previous year) 613 603 509 248 231 154 141 +6.5% +6.1% 127 126 116 108 106 +4.0% +2.7% +2.7% +1.8% +2.1% +1.7%
Slide 7: Production capacity rationalization restarted
Production capacity rationalization restarted 2 plants closed in 2014, 1 closure ongoing: improve saturation in Europe St.Petersburg (RUS) Wuppertal (GER) partial closure Amsterdam (NED) Derby (UK) Hickory (US) Eschweiler (GER) Aubevoye (FRA) Livorno Ferraris (ITA) Sant Vicenç (SPA) Angel (CHI) Sing
Slide 8: Synergies Plan update
Synergies Plan update Overheads (fixed costs) Procurement 175 Operations ~140 85 120 70 60 ~155 65 140 45 30 100 45 45 45 30 45 13 6 25 10 15 7 5 Note: Cumulated synergies figures are not audited. Calculation is based on internal reporting Company Presentation – March 2015 8
Slide 9: Agenda
Agenda Group overview Results by business Financial Results Appendix Company Presentation – March 2015 9
Slide 10: Energy Projects
Energy Projects Euro Millions, % on Sales Sales Highlights +1.7%* Submarine +6.5%* +6.1%* • Double digit organic growth in FY’14 excl. Western Link 1,416 1,360 1,355 1,250 • Increase in profitability excl. Western Link; WL total financial impact confirmed, recovery program on track, restored full pr
Slide 11: Energy Projects
Energy Projects Sales breakdown Sales by business Sales by geographical area SURF APAC 8% 7% Latin America 8% North America High Voltage 10% 37% Sales FY14 Sales FY14 € 1.4 bn € 1.4 bn Submarine 55% EMEA 75% Company Presentation – March 2015 11
Slide 12: Leadership in submarine reconfirmed by projects awarded in 2014
Leadership in submarine reconfirmed by projects awarded in 2014 Record visibility in Submarine Transmission – Orders Backlog (€m) > € 1bn submarine projects awarded in 2014 Submarine High Voltage ~3,000 ~2,800 ~2,800 3 1 4 ~500 ~450 ~2,500 ~500 6 ~2,450 ~2,350 5 ~450 ~550 ~650 2 7 ~1,650~1,700 ~1,55
Slide 13: Energy & Infrastructure
Energy & Infrastructure Euro Millions, % on Sales Sales Highlights -5.5%* Trade & Installers +2.7%* 3,139 2,747 2,677 • Mid single digit organic growth in FY, softening from Q2, driven by volume recovery in Europe partly offset by lower pricing • Profitability decrease attributable to price pressure
Slide 14: Energy & Infrastructure
Energy & Infrastructure Sales breakdown Sales by business Sales by geographical area APAC 11% Power Distribution Latin America 29% 7% Sales FY14 North America Sales FY14 € 2.7 bn 11% € 2.7 bn EMEA Trade & Installers 71% 71% Company Presentation – March 2015 14
Slide 15: Industrial & Network Components
Industrial & Network Components Euro Millions, % on Sales Sales Highlights +2.1%* Specialties & OEMs -0.3%* • Weak FY’14 performance due to Europe and Americas; good trend in 1,849 1,788 1,708 APAC. Lower contribution from Mining, Nuclear, Infrastructure partially offset by Renewables, Rolling Stock
Slide 16: Industrial & Network Components
Industrial & Network Components Sales breakdown Sales by business Sales by geographical area Other Network 4% Components APAC 8% Specialties & OEMs 1) 23% 43% EMEA 47% Automotive Sales FY14 Sales FY14 20% € 1.7 bn Latin America € 1.7 bn 6% Elevator 9% North America Oil & Gas 24% 16% 1) Includes Rene
Slide 17: Telecom
Telecom Euro Millions, % on Sales Sales Highlights -15.4%* Optical, Connectivity & Fiber 1,202 +4.0%* • Strong volume recovery in optical (FTTH/FTTA development and 986 994 backbone investments) with stabilization of prices in H2. Profitability also supported by YOFC contribution • Sound demand in t
Slide 18: Telecom
Telecom Sales breakdown Sales by business Sales by geographical area OPGW & Other APAC Copper 5% 13% 13% Latin America 14% Sales FY14 Sales FY14 € 1.0 bn € 1.0 bn Multimedia & Specials 21% EMEA North America Optical, 14% 59% Connectivity & Fiber 61% Company Presentation – March 2015 18
Slide 19: Telecom: Positive expectations for 2015 in Europe and US
Telecom Positive expectations for 2015 in Europe and US Telecom optical volumes (2013=100) Consumption of fiber optic cable (fkm, CRU) CAGR +12% Market * Prysmian Europe 2013 2014 2015E CAGR +13% 122 125 116 100 100 US 2013 2014 2015E CAGR +8% 2013 2014 2015E • Optical fiber consumption increased by
Slide 20: Agenda
Agenda Group overview Results by business Financial Results Appendix Company Presentation – March 2015 20
Slide 21: Profit and Loss Statement
Profit and Loss Statement Euro Millions FY 2014 excl. WL Submarine WL submarine FY 2014 FY 2013 1) project effect project effect Sales 6,901 (61) 6,840 6,995 YoY total growth (1.3%) (2.2%) YoY organic growth 2.7% 1.8% Adj.EBITDA 603 (94) 509 613 % on sales 8.7% 7.4% 8.8% Non recurring items (13) - (
Slide 22: Bridge Consolidated Sales
Bridge Consolidated Sales Euro Millions Energy Projects Energy Products 83 ( 61 ) (5 ) (22 ) 65 ( 93 ) (130) Org.growth +1.7% Org.growth excl.WL 1,360 +6.1% 1,355 Org. growth 4,649 +1.4% 4,491 FY 2013 Org.Growth WL effect Metal Effect Exc. Rate FY 2014 FY 2013 Org.Growth Metal Effect Exc. Rate FY 20
Slide 23: Impact of currencies and WL project on Sales and Adj.EBITDA
Impact of currencies and WL project on Sales and Adj.EBITDA Profitability decrease fully attributable to WL project and negative currency translation effect Sales Adj. EBITDA Of which: Of which: • Energy Projects 22 • Energy Projects 2 • E&I 89 • E&I 6 • Ind. & Netw. Comp. 38 • Ind. & Netw. Comp. 3
Slide 24: Extraordinary Effects
Extraordinary Effects Euro Millions FY 2014 FY 2013 2) Antitrust investigation 31 6 Restructuring (48) (50) Price adjustments 22 - Other (18) (6) EBITDA adjustments (13) (50) Special items (40) (47) Gain/(loss) on metal derivatives 7 (8) Assets impairment (44) (25) Other (3) (14) EBIT adjustments (5
Slide 25: Financial Charges
Financial Charges Euro Millions FY 2014 FY 2013 2) Net interest expenses (87) (100) of which non cash Conv.Bond interest exp. (8) (6) Bank fees amortization (7) (8) Gain/(loss) on exchange rates (20) (27) Gain/(loss) on derivatives 1 ) (16) (8) Non recurring effects (10) (7) Net financial charges (1
Slide 26: Statement of financial position (Balance Sheet)
Statement of financial position (Balance Sheet) Euro Millions 31 December 31 December 2014 2013 1) Net fixed assets 2,219 2,207 of which: intangible assets 561 588 of which: property, plants & equipment 1,414 1,390 Net working capital 407 386 of which: derivatives assets/(liabilities) (16) (6) of wh
Slide 27: Cash Flow
Cash Flow Euro Millions FY 2014 FY 2013 1) Adj.EBITDA 509 613 Non recurring items (13) (50) EBITDA 496 563 ∆ NFP 2010PF -2014 Net Change in provisions & others (53) (76) Share of income from investments in op.activities (43) (35) NFP Pro-forma 2010* (1,214) Cash flow from operations (before WC chang
Slide 28: Dividend proposal
Dividend proposal Dividend proposed to the forthcoming Shareholders’ Meeting Total Shares (1) • Dividend Per Share € 0.42 • Total payout: € 90 millions 216,720,922 • Ex-dividend date: 20 April 2015 • Payment date: 22 April 2015 Shares with dividend right (2) DPS evolution (Euro per share) 213,906,93
Slide 29: Agenda
Agenda Group overview Results by business Financial Results Appendix o Prysmian at a glance Company Presentation – March 2015 29
Slide 30: Key Milestones
Key Milestones 1879 1902 1998 2001 2005 2008 2011 Organic Growth by Restructuring Managing the Growth by Establishment Profitable growth growth acquisition process downturn acquisition Listing Public #1 Cable Company July 28, ‘05: Strategic Company Maker founded as Product Closure of 11 GS “Pirelli
Slide 31: Global Top Cable Manufacturers
Global Top Cable Manufacturers Prysmian Group #1 in cable solutions for the energy and telecommunication business Market concentration Top 12 27.5% 5.8% 5.3% 2013 Share of total revenues Others 72.5% 3.8% 2.3% 1.5% 1.4% 1.3% 1.3% 1.2% 1.2% 1.2% 1.1% Prysmian Nexans General Southwire Furukawa LS Cabl
Slide 32: Prysmian Group business portfolio
Prysmian Group business portfolio Focus on high value added segments PROFITABILITY Submarine Look for Network Components SURF Profitable High Growth Optical Cables & Fibre • Focus on products and High Voltage service • Focus on • Limited solutions product Medium Industrial • Diversification diversif
Slide 33: Cash Flow generation as key priority to create value for shareholders
Cash Flow generation as key priority to create value for shareholders Growing capabilities to invest organically/acquisitions and remunerate shareholders Cash Flow generation Free Cash Flow (levered) excl. Acquisitions (L axis) NFP / Adj. EBITDA (R axis) € mln 320 2.4x 240 2.0x 160 1.6x 80 1.2x > €
Slide 34: Disciplined Capex to grow in high margin business and out of Europe
Disciplined Capex to grow in high margin business and out of Europe Investments focused on business with long term drivers and high entry barriers CAPEX 2007-2014 (€ mln) Prysmian + Draka Cap. Increase & Product mix 159 163 152 144 116 107 102 89 € 511 million cumulated CAPEX 2007-14 to sustain 90 8
Slide 35: Metal Price Impact on Profitability
Metal Price Impact on Profitability Supply Main Application Metal Influence on Cable Price Metal Fluctuation Management Contract Impact Impact • Projects (Energy • Technology and design • Pricing locked-in at order intake transmission) content are the main • Profitability protection through Predeter
Slide 36: Agenda
Agenda Group overview Results by business Financial Results Appendix o Financials Company Presentation – March 2015 36
Slide 37: New segment reporting
New segment reporting Effective from FY 2014 SEGMENT ENERGY PRODUCTS ENERGY TELECOM PROJECTS REPORTED Industrial & Energy & Network Other Infrastructure Components Trade & OEMs & Optical, Connectivity Submarine Other Installers Specialties & Fiber Power Multimedia & High Voltage Automotive Distribut
Slide 38: New segment reporting
New segment reporting Sales and Adj.EBITDA breakdowns Previous Segment Reporting New Segment Reporting Sales Sales Telecom Telecom Energy 14% 14% Projects Other Other 20% Utilities 2% 32% 2% Industrial € 6,840m € 6,840m Industrial & 24% Netw.Comp. Energy 25% Products 66% E&I T&I 39% 28% Adj.EBITDA A
Slide 39: Energy Projects Segment – Profit and Loss Statement
Energy Projects Segment – Profit and Loss Statement Euro Millions FY 2014 excl. WL Submarine WL submarine FY 2014 FY 2013 1) project effect project effect Sales to Third Parties 1,416 (61) 1,355 1,360 YoY total growth 4.2% (0.3%) 8.8% YoY organic growth 6.1% 1.7% 6.5% Adj. EBITDA 248 (94) 154 231 %
Slide 40: Energy Products Segment – Profit and Loss Statement
Energy Products Segment – Profit and Loss Statement Euro Millions FY 2014 FY 2013 1) E&I 2,677 2,747 YoY total growth (2.6%) (12.5%) Sales to Third Parties YoY organic growth 2.7% (5.5%) Industrial & Netw. Comp. 1,708 1,788 YoY total growth (4.4%) (3.3%) YoY organic growth (0.3%) 2.1% Other 106 114
Slide 41: Telecom Segment – Profit and Loss Statement
Telecom Segment – Profit and Loss Statement Euro Millions FY 2014 FY 2013 1) Sales to Third Parties 994 986 YoY total growth 0.8% (18.0%) YoY organic growth 4.0% (15.4%) Adj. EBITDA 116 106 % on sales 11.7% 10.8% Adj. EBIT 74 63 % on sales 7.4% 6.4% 1) Final restated figures in application of IFRS 1
Slide 42: New segment reporting: 2013-14 by quarter
New segment reporting: 2013-14 by quarter Euro Millions SALES and ORGANIC GROWTH Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 ENERGY PROJECTS 278 324 368 390 268 321 326 440 2.3% 1.4% -10.8% 13.4% E&I 676 746 711 614 638 678 699 662 4.7% -0.8% 0.9% 6.9% INDUSTRIAL & NET.COMP. 434 478 438 438 414
Slide 43: Financial Structure
Financial Structure Euro Millions Debt structure (€m) 31.12.2014 (€m) Available 31.12.14 30.09.14 31.12.13 (1) Used Funds (3) Maturity Term Loan 2010 (2) - - 183 - - - Eurobond 5.25% 415 409 414 415 - 04/2015 Term Loan 2011 400 400 400 400 - 03/2016 Revolving 2011 - 150 - - 400 03/2016 Convertible b
Slide 44: Prysmian Historical Key Financials
Prysmian Historical Key Financials Euro Millions, % of Sales – Pre Draka acquisition Sales Sales Adjusted EBITDA (1) Adjusted Adjusted EBIT1EBIT (2) 529 542 5,007 5,118 5,144 4,571 464 477 407 403 387 3,742 3,731 330 334 309 +4.2% * 265 +8.2% * +9.3% * +3.2% * -17.4% * 171 2005 2006 2007 2008 2009 2
Slide 45: Historical Key Financials by Business Area – 1/2
Historical Key Financials by Business Area – 1/2 Euro Millions, % of Sales – Pre Draka acquisition Sales Vs Third Parties Adjusted EBITDA (1) Adjusted EBIT (2) 2,028 287 256 1,894 266 237 1,853 1,790 250 215 237 208 1,598 1,445 Utilities 197 157 +12.1% * 143 +3.3% * +1.5% * 107 -13.9% * 2005 2006 20
Slide 46: Historical Key Financials by Business Area – 2/2
Historical Key Financials by Business Area – 2/2 Euro Millions, % of Sales – Pre Draka acquisition Sales Vs Third Parties Adjusted EBITDA (1) Adjusted EBIT (2) 850 93 795 80 742 84 71 629 628 Industrial 62 61 489 46 +5.0% * +21.1% * 46 42 -1.1% * 39 34 -16.1% * 25 2005 2006 2007 2008 2009 2010 2005
Slide 47: Agenda
Agenda Group overview Results by business Financial Results Appendix o Energy Projects and Energy Products Company Presentation – March 2015 47
Slide 48: Investing in submarine to increase ROCE
Investing in submarine to increase ROCE Strengthening production and installation (Cable Enterprise) capabilities Arco Felice (Italy) Drammen (Norway) Pikkala (Finland) Main projects in execution/orders backlog: • Western Link • Balearic Islands • HelWin 2/ SylWin 1/ • Capri BorWin 3/ DolWin 3 / • Z
Slide 49: Off-shore wind development in Europe
Off-shore wind development in Europe High visibility on new projects to be awarded next quarters Europe Offshore Wind capacity (GW) Europe 2014 Cumulated Capacity by Country Cumulated Offshore Wind capacity (L axis) Others 0.3 GW Annual Additional capacity (R axis) Netherlands 0.2 GW 20 38 1.8 Belgi
Slide 50: Major transmission projects to be awarded
Major transmission projects to be awarded Large pipeline of pan-European projects under development Main subsea and underground projects of pan-European significance List of main projects Main power flow trends 1. Italy – France Main subsea & underground projects in design & permitting 2. Germany (B
Slide 51: Latest submarine projects awarded
Latest submarine projects awarded Key success factors Latest Key projects Customers Period €m* • Track record and reliability Wikinger Iberdrola Renovables Offshore 2015-16 60 Philippines NGCP 2015-16 90 • Ability to design/execute turnkey Dardanelles 2 TEIAS 2015-16 64 solution Cyclades IPTO 2015-1
Slide 52: Western Link a milestone in the submarine sector
Western Link a milestone in the submarine sector Western Link route Large Off-shore Wind investments planned in Scotland Western Link milestones • The highest value cable project ever awarded, worth €800 mln • The highest voltage level (600kV) ever reached by an insulated cable • Currently unmatched
Slide 53: Western Link: a strong recovery to properly address the production issue
Western Link: a strong recovery to properly address the production issue and minimize the economic impact Project Highlights WL production process Progress Status Stranding Turntable • Awarded in February 2012 to Prysmian- • Cable called back from Siemens consortium UK successfully passed • Customer
Slide 54: SURF – Off-shore oil exploration
SURF – Off-shore oil exploration Oilfield structure Flexible Pipes Fixed Floating Platform Floating Platform (SEMI-SUBMERSIBLE) Platform (FPSO) Umbilical Injection control Umbilical (Power) Flexible Pipes Umbilical For control Christmas Manifold Tree Petrol Well Company Presentation – March 2015 54
Slide 55: SURF – Off-shore oil exploration
SURF – Off-shore oil exploration Cross selling opportunities driven by the Downhole technology business contributed by Draka Downhole Technology (DHT) HYBRID ELECTRO-OPTIC FIBER OPTIC ELECTRICAL GAS & FLUID TUBING PACKAGED GAS & FLUID TUBING Company Presentation – March 2015 55
Slide 56: Trade & Installers – Overview
Trade & Installers – Overview BUSINESS DESCRIPTION KEY SUCCESS FACTORS • Building wires, Low and Medium voltage cables for Global partner with strong local presence residential, commercial, industrial and infrastructure constructions Full Product range • Partner of the World best Wholesalers, Instal
Slide 57: Trade & Installers
Trade & Installers Offer overview - POWER SUPPLY - LIGHTING - EMERGENCY CIRCUITS (INTERIOR/EXTERIOR) RESIDENTIAL – COMMERCIAL – - CONNECTIONS - BRANCHES INDUSTRIAL - INFRASTRUCTURE - MACHINERY (MOBILE OR NOT) - CONTROL/DATA - SWITCHBOARD - ELECTRICAL APPLIANCES BEST IN CLASS FIRE RESISTANT AND LSOH
Slide 58: Industrial & Network Components – Overview
Industrial & Network Components – Overview Business description Key customers Integrated cable solutions highly customized to our Large and differentiated customer base industrial customers worldwide generally served through direct sales Oil & Gas Addressing the cable needs of research and refining,
Slide 59: Macro-structure of Energy Cables
Macro-structure of Energy Cables Product macro structure Production process Conductor Final production Outer jacket (drawing, Insulation Screening Lay up Armouring Sheathing quality (Polyolefine, PVC, …) inspection Insulation (XLPE, EPDM) stranding) WB yarns Conductor (Cu, Al) Building Wire (T&I) Lo
Slide 60: Agenda
Agenda Group overview Results by business Financial Results Appendix o Telecom Company Presentation – March 2015 60
Slide 61: Telecom – Overview
Telecom – Overview Business description Key customers Integrated cable solutions focused on high -end Telecom Key customers include key operators in the telecom sector Telecom solutions Optical cables: tailored for all today’s challenging environments from underground ducts to overhead lines, rail t
Slide 62: Optical cables
Optical cables Global overview Market trends Key success factors • Demand function of level of capital expenditures • Continuous innovation and development of new budgeted by large telecom companies cable & fibre products (PTT/incumbents as well as alternative • Cable design innovation with special
Slide 63: Telecom Cables Main Applications
Telecom Cables Main Applications BACKBONE METROPOLITAN RING ACCESS NETWORK Company Presentation – March 2015 63
Slide 64: Telecom – Market trend
Telecom – Market trend Growth opportunities coming from the development of broadband in Europe Evolution of NGA (Next Generation Access) Opportunities coming from national plans to coverage and high-speed (>30Mbps) / ultrafast achieve EU 2020 Digital Agenda targets (>100Mbps) take-up (% of homes) in
Slide 65: Telecom – FTTA as key driver of optical demand
Telecom – FTTA as key driver of optical demand 4G and Long Term Evolution (LTE) deployments require Fiber-to-the-Antenna (FTTA) Global LTE Growth Forecast # of users Roof top antenna towers for urban applications Antenna towers used by 4G and LTE networks Source: Informa Telecoms & Media, WCIS+, Mar
Slide 66: Macro-structure of Telecom Cables
Macro-structure of Telecom Cables Product macro structure Production process Primary Coating (250 Micron) Fibre Cladding (125 Micron) optic Core (10 Micron) Final quality Pre form deposition Consolidation Drawing inspection Main Technologies: OVD - VAD - MCVD Aramid Yarns Loose tubes Optical fibres
Slide 67: Reference Scenario
Reference Scenario Commodities & Forex Brent Copper Aluminium Brent $/bbl Copper $/ton Aluminium $/ton Brent €/bbl Copper €/ton Aluminium €/ton 150 12,000 3,500 125 10,000 3,000 2,500 100 8,000 2,000 75 6,000 1,500 50 4,000 1,000 25 2,000 500 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-08 J-09 J-10 J-
Slide 68: Disclaimer
Disclaimer • The managers responsible for preparing the company's financial reports, A.Bott and C.Soprano, declare, pursuant to paragraph 2 of Article 154-bis of the Consolidated Financial Act, that the accounting information contained in this presentation corresponds to the results documented in th